patrick.net

My property taxes went up $100 last year to pay these thieves.

CTA goes on NPR, talks up sob stories about how our kids are suffering with too little money in education and than voters cry and go vote a tax increase. God forbid teachers don't get their full pension gains or yearly raises one year... they shield themselves behind the students. Pathetic and disgusting.

ChrisLA says

pay these thieves

ChrisLA says

God forbid teachers don’t get their full pension gains or yearly raises one year… they shield themselves behind the students. Pathetic and disgusting.

Only in chrisLA world are layoffs, and PAY CUTS (that's right) equal to yearly raises. Class sizes have grown and my pay is lower than it was in 2009. Your attitude speaks volumes (about you) to anyone who know what's going on.

MarkInSF says

financial planners and companies that stand to invest that money while making profit off of the fees they can charge each individual.

Note the term "each individual." I don't see conspiracy, but I can see that 10s of thousands of 401K accounts would generate an entirely different kind of business than the deeply discounted fees for huge volume trades that STRS makes.
MarkInSF says

The only difference is that the beneficiaries of CalSTRS are guaranteed a 7.75% return, since governments have to kick in more if the investments don’t pan out. (And they haven’t)

Actually, I believe they have average near 8% for decades. But I will agree that it isn't guaranteed in to the future.

We've been through this. I understand your issue, but I think the emotion is out of proportion to the cost. And as you know, I view the cost as the cost of teacher compensation. My pay isn't that high, but my benefits are good. So ?

MarkInSF says

And I’m ticked off they they won’t even acknowledge this as a valid complaint.

The advantage I have, whatever it is, has a value. In previous anaysis, I tried to guesstimate a value by comparison to SS. Let's say that value for me right now is 5K per years (that is the cost of my pension to the state and the district over and above what it would be with SS).

Whatever the value, if I received that amount in cash (that is a salary that is 5K higher than mine is now, would you still complain ?

marcus says

Whatever the value, if I received that amount in cash (that is a salary that is 5K higher than mine is now, would you still complain ?

No. But that's not realistic. Just take 2 workers that started working at 25, and are retiring today.

Somebody on SS retiring this year at 67, that earned 50K in their last year, and the SS assumed average rate of increase in earnings, would have a benefit of $1530/mo. The total SS contribution (employee + employer) was about 10% of wages. Their life expectancy is 15.5 years, so that's $285K in total benefits.

A teacher retiring at 55 after 30 years that earned 50K in their last year would have a $2500/month benefit. With a life expectancy of 27.5 years, they'll be getting $825K in total benefits.

OK, so teachers contributions are more, right? It's been about a 20% contribution. However it's only over 30 years, not the 42 years that the SS covered worker worked. Ignoring the fact the SS covered worker has saved LONGER, and so compounding should be more significant, the teacher has contributions of about 42% more than the SS covered worker. That gets them to about $404K (42% more than $285K) total benefits under SS terms.

So there is still a $420K gap, about 1/2 of the teachers total benefits. Essentially you'd have to roughly double your contribution to 40% of salary to get the same deal a SS covered worker gets. So really, this extra benefit is more like 20% of salary.

(don't even get me started on public safety worker pensions, and admin staff raking in $100K pensions)

marcus says

Actually, I believe they have average near 8% for decades.

The only reason they can get away with making this claim is because of the returns smoothing they use. The 90's returns from the stock market we're hardly normal.

According to CTA:

For the ten years ending Dec. 31, 2009, CalSTRS squeaks out a meager 2.9 percent annualized return

http://www.google.com/url?sa=t&source=web&cd=5&ved=0CDUQFjAE&url=http%3A%2F%2Fwww.cta.org%2F~%2Fmedia%2FD35EDDF6A009458299EC8226CE96B478.ashx&rct=j&q=history%20of%20calstrs&ei=UmmaTZTeLJG6sAPCyaSKBA&usg=AFQjCNF7xF7ZqToOGRHHfZk4-GoHhJJnqQ&sig2=eZ1wFn_jizTyHbbZLFjQFw&cad=rja

They got a bump in 2010, but man is their portfolio risky. They need to go back to low-risk fixed income investments like they had 1913-1970, or even mostly pay as you go like SS, and stop making pie in the sky promises that can only be met by deceiving taxpayers about pension expenses.

CalSTRS operates on a pay-as-yougo
mode from 1913 till July 1, 1972.

The more I think about this, the more I think that the whole stock 1980-2000 market boom was due to pensions going into the stock market. In the private market it's explicit with the adoption of 401Ks, etc. In the public pensions, they pretend to be an old fashioned pension like grandpa had, but they invest in equities all the same.

MarkInSF says

So there is still a $420K gap, about 1/2 of the teachers total benefits. Essentially you’d have to roughly double your contribution to 40% of salary to get the same deal a SS covered worker gets.

No teacher retires at 55. The highest multiple doesn't kick in til 60. If you have a financial calculator, check to see the future value of 5K per year invested over 35 years if you get 6%.

Also, SS is not the same, it includes disability, death benefits to children, and also you will get the maximal benefit in far less than 35 years. I'm pretty sure you could not work until 45, and then work for twenty years on SS and get the max.

And again, I'm only comparing cost !!! 5K is a high estimate, I believe the difference is less. Cost, Cost, cost to the employer.

I know you can't hear me or understand what I'm saying, because I've said it before. That's okay, spread your disinformation.

MarkInSF says

The more I think about this, the more I think that the whole stock 1980-2000 market boom was due to pensions going into the stock market. In the private market it’s explicit with the adoption of 401Ks, etc. In the public pensions, they pretend to be an old fashioned pension like grandpa had, but they invest in equities all the same.

PRECISELY!

State run pensions in California were buying up LAND and getting into all kinds of development and property deals. They were on the "stodgy" end of things compared to the rest of the finance world, but still caught up in the same mania. I can't really fault managers for reasonably believing they could promise the good returns that they did. We had many decades of stability since Glass-Steagall, and after it was repealed we have EXPLOSIVE growth. "Oh you aren't into Mortgage-backed Securities? You poor thing, you are MISSING OUT!" The only people talking about risk and bubble, were dismissed as crackpots.

MarkInSF says

the more I think that the whole stock 1980-2000 market boom was due to pensions going into the stock market.

ayup. The leading edge of the baby boom was turning 30 in 1980, time to start investing.

The bumrush into the market was immense . . . ~80 million people aged 15 to 34 in 1980!